russian fulfillment market research

E-COMMERCE ORDER FULFILLMENT SERVICES

JANUARY 2016

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RESEARCH PARTNERS

4E-COMMERCE ORDER FULFILLMENT SERVICES

1. INTRODUCTION .....................................................................................................................5

2. HOW IT WORKS ................................................................................................................... 6

3. COMPONENTS OF ORDER FULFILLMENT ................................................................. 8

Services ................................................................................................................................... 8

Additional services ............................................................................................................. 12

eTraction CASE. How switching to a fulfilment operator increased sales .................14

4. OUTSOURCED ORDER FULFILLMENT SERVICE VS IN-HOUSE FULFILLMENT SERVICE ....................................................................... 19

Benefits of a third-party order fulfillment...................................................................... 19

American cosmetics CASE. Experience of a small online store in choosing an order fulfillment partner ...........................................................................24

Cons of outsourced order fulfillment ............................................................................ 28

Interview with Sergey Egorov, CDEK commercial director ........................................ 30

5. ORDER FULFILLMENT CUSTOMERS — WHO THEY ARE AND WHAT DO THEY WANT ...................................................... 35

Potential customers of order fulfillment services ...................................................... 35

Customer’s order fulfillment ............................................................................................ 39

6. ORDER FULFILLMENT MARKET DYNAMICS .......................................................... 42

Factors stimulating market growth ............................................................................... 42

Market growth constraints ............................................................................................... 42

Trends ................................................................................................................................. 48

7. MARKET PLAYERS ........................................................................................................... 50

Overview ............................................................................................................................... 50

What happens to the players? ........................................................................................ 53

Main players ......................................................................................................................... 55

8. RESEARCH PARTNERS .................................................................................................. 87

9. DATA INSIGHT LOGISTICS RESEARCH ..................................................................... 88

10. DATA INSIGHT. RESEARCH & CONSULTANCY AGENCY ................................... 92

Table of content

4 5E-COMMERCE ORDER FULFILLMENT SERVICES

Introduction

Russian order fulfillment market is still young and not well-

formed yet. There are few players that barely compete. Market

grows not fast enough. The main reason is the lack of knowledge

on the order fulfillment services. Today the number of companies

entering e-commerce market is dramatically increasing, but they

are not acquainted with the potentials of the fulfillment services.

We conducted a research «E-commerce order fulfillment

services» in order to show who is present in the market, what

kind of services are accessible, what are the difficulties in this

segment development. Besides, our aim was to show the main

advantages and disadvantages of cooperation with an order

fulfillment company in comparison with the own in-house service.

On paper, the prospects of outsourcing are very attractive, but

in reality there are pitfalls that should be kept in mind when

choosing between an outsourced and in-house service.

We conducted a series of market players and client expert

interviews, and found out that partnership between order

fulfillment services and e-commerce companies could be

profitable to both parties: existence of order fulfillment services

is a growth driver for the entire e-commerce market. We would

not find many examples of the cooperation of this kind on the

market today, but they are becoming more numerous every day.

We would like to express our special recognition to our

partners and the experts who assisted in creation of this study:

American Cosmetics, Arvato, Beta PRO, eTraction, Itella, KupiVIP

eCommerce Services, Lamoda B2B, Reworker, Selling Distance

Services, СDEK, SPSR-Express.

Varvara Nekhina,

Leading Analyst direction «Logistics» in Data Insight

Varvara Nekhina,

Leading Analyst direction

«Logistics» in Data Insight



HOW IT WORKS

FULFILLMENT

Online-shop

Arrival of goodsat the warehouse

Acceptance of goods• Product bar-code labeling and registration in local IT-system.

OR

• Order registration without local labeling.

• Аn order is automatically sent to the order fulfillment operator system.

OR

• An online-shop employee notifies the operator of incoming orders: by mail,

with a list of goods once in a period of time, by phone.

OR

• Order fulfillment company employee monitors incoming online-shop orders on

the store web-site and registers them in local order fulfillment system.

• Goods are collected in an order.

ОR

• An order is completed in few steps. Primarily all goods ordered are select and

only then distributed by orders.

• Packing in standard order fulfillment operator boxes or bags.

OR

• Packing in boxes or bags proposed by an online-shop.

• Ready mailings are forwarded to a delivery service or to the Russian Post service.

OR

• Ready mailings are forwarded to the operator fulfillment own

delivery service.

• Online-shop transports their goods on their own.

OR

• Order fulfillment company transports an order from

an online-shop to its warehouse.

OR

• Order fulfillment company picks up an order from

the supplier and delivers it to its own warehouse.

• Goods quality check could be carried out.

Last mile

Final buyer

Distribution of goodsin the warehouse

Order рrocessing

EquipmentOrder packaging

• An order may be supplemented by promotional materials.

• IT- system determines goods positions in the warehouse.

OR

• А warehouse employee determines goods positions in the warehouse and registers

it in local IT-system.

OR

• А warehouse employee determines goods positions in the warehouse, local IT-system

is not involved or is absent.

Preparation for shipment


COMPONENTS OF ORDER FULFILLMENT

ORDER FULFILLMENT is a set of measures of online-

shops order processing, including order registering, storage,

processing, equipment and order packaging.

Services

List of services that are included in the concept of order

fulfillment.

1. ACCEPTANCE OF THE GOODS. The order fulfillment

IT-system is supposed to store information about all goods

sold in an online-shop. When goods arrive to the ware-

house, each item is registered in the local system. After that

all remnants in stock are recalculated. All goods registra-

tions are based on the factory bar code. If it contains all the

required information, it is not necessary to change label-

ing. If the factory bar code is not complete, the warehouse

employee labels it with a local bar-code.

Risks:

• incorrect accounting of the goods (not all goods are regis-

tered);

• delivery of the wrong goods;

• an item ID is not present in the system and it could not

be registered.

Precautionary measures:

• permanent accounting of goods in a warehouse;

• complete goods verification when accepted;

• automatization of the goods acceptance process to mini-

mize the human factor;

• full integration of the online-shop and order fulfillment

provider is required to avoid errors of product information

transferring from one system to another and reduce the

procedure of operations processing time.

Automation of processes

in the order fulfillment’s

warehouse decreases

the main risks when working

with goods.


8

Components of order fulfillment

Advantages of an outsourced order fulfillment service over

an in-house service:

A warehouse employee is in charge of goods acceptance

for many customers, so the cost of his work is lower for an

online-shop than recruitment of in-house staff. If a staff

member is supposed to be engaged in various operations

(to reduce the cost of a single operation), his quality is not

as high as that of a professional who is constantly making

a limited number of operations.

2. STORAGE. Goods are stored on the shelves, if they do not

require any special conditions. They could be placed in cells

to simplify searching and storage. Pharmaceutical products

and cosmetics, which need special temperature conditions,

are stored in specially equipped rooms. On client request

clothes could be kept on special hangers (construction of

pillars or poles with сrossbeams designed for hanging).

Some goods could be kept in closed rooms with a limited

access.

Risks:

• stealing of goods from the cells;

• inefficient use of storage space.


• computerization of all or a part of the processes on the

order fulfillment warehouse;

• engaging staff only avoiding outsourcing of personnel;

• a clear system of rewards and penalties for the staff;

• creating and strict following rules of access;

• automation of the process of goods accommodation. If the

system is in charge of goods distributing within a ware-

house, the use of cells will be optimal.



An order fulfillment company is more competent in staff

managing and concentrated on motivating their employees

to work honestly. The head of an online-shop is supposed to

create his own motivation and control system to minimize the

risk of stealing.

Goods processing on

an order fulfillment

warehouse is divided into

smaller operations.

This simplifies control of

the process and provides

a high quality at each stage

of order processing.



3. ORDER PROCESSING. It is registering each incoming or-

der in the system. It could be processed within recep¬-

tion of buyers calls in a call-center, via shopping carts

or a list of orders from the online-shop. A call-center

could be a department of the order fulfillment service

or a third-party company. In any case interaction of an

online-shop and a call-center could be organized in

a one-window mode by an order fulfillment partner.

Risks:

• mistakes when registering a customer or an order;

• no opportunity to provide a buyer with additional informa-

tion on the goods.


• clear instructions (scripts) for the call-center employees;

• trainings and acquaintance of staff with online-shop assort-

ment;

• assign responsible call center employees to be in charge of

one online-shop. A call-center employee will better know

and understand the online-shop goods range, if he is con-

stantly working with it;

• integration of online-shop with order fulfillment and de-

livery services systems. It will eliminate the possibility of

errors when transferring data from one system to another;

• motivation system of call-center employees.



Focus on the price. The cost of external call-center (usu-

ally it is a multi-line phone) corresponds with one employee

salary.

4. ORDER EQUIPMENT. This is the process of preparation

an incoming order. An order may include several goods

stored in different locations. An employee is in charge of

only one or several orders simultaneously.



Risks:

• ordered item is not in stock;

• the route of the employee when collecting goods in the

warehouse is not optimized;

• selection of wrong goods.


• integration of online-shop and order fulfillment operator

systems. This will ensure continuous data exchange of the

information on the goods in the online-shop cart and their

amount in the store, automatic recalculation of the instore

remnants;

• automation of the process. The system will itself propose

the best route for the goods collecting. It will also examine

what goods were taken by an employee and compare to

the one that should have been taken, the probability of er-

rors is greatly reduced.



The cost of developing an in-house IT-systems and process-

es automation is very high. When it is carried out by an order

fulfillment operator, the costs are partially distributed between

his clients. This reduces the costs.

5. PACKAGING. Equipped orders are placed in boxes or

packages for further transportation to the buyer. It also

includes creating of transport documents: information

about the destination (address, contact information) and

the return forms (if required).

Risks:

• choosing a package of wrong size.


• employee trainings;

• full or partial automation of the process. Machine inde-

pendently packs or proposes a package of correct size.

It is more profitable to safe

non-fragile items in special

packages. They are opaque

and cannot be quietly open.

This will reduce the cost of

consumables (tape, box)

while the size of the order is

corresponding to packaging.





Packing speed of order fulfillment staff is very high, as they

pack hundreds of orders a day. They have strict rules on the

amount of packed orders.

6. PROCESSING NON-DELIVERED ORDERS AND RETURNS.

Non-delivered order (NDO) is returned by the delivery ser-

vice and did not reach the customer (refused in advance).

Returned order (RO) is receivedfrom the end buyer after he

or she had opened or tried it on (clothing and footwear).

If the packaging has not been broken, each item passes

again the registering procedure. If the packaging has been

broken, items pass thorough a quality test.

Risks:

• the buyer did not cancel the order, but the order was re-

turned by the delivery service.

• returned goods cannot be sold again.


• cooperation only with reliable delivery services;

• improvement of recovery and recycling processes. These

could be processed by the online-shop independently or be

proposed by the order fulfillment company, which recycles

products.



An online-shop does not interact with any courier servic-

es which deliver its orders. Order fulfillment operator indepen-

dently solves all the problems associated with delivery to the

buyer.

Additional services

OPERATIONS WITH THE GOODS:

• Checking the quality of goods. It is additional inspection

of the received goods on the subject of defects, spots,

malfunctions. It prevents possible refunds for not-quality

goods. Items are registered in store only passing through

a quality control test.

When choosing an order

fulfillment external service,

e-shop are released from

interacting with courier

companies.



• Photoproduction. It is professional photography of goods

for the online-shop cart.

• Adding promotional materials. Before packing order is

supplemented by advertising materials / compliments /

samplers.

OPERATIONS FOR END-CUSTOMERS:

• Informing customers by phone or e-mail. Customers are

informed of the stages of order processing (the order is

accepted, the order is processed, the order is canceled and

so on) as well as of delivery process (when and where the

courier arrives, where the order can be picked up and etc.).

• Call-center. There are multichannel phone, order process-

ing staff (may be assigned to one store or not) in call-center

and all this is for the price corresponding with the salary

of one full-time employee. Call-center workers have scripts

which they follow to communicate with customers.

OPERATIONS FOR ORDER FULFILLMENT SERVICES

CLIENTS:

• Tracking. Order fulfillment operator provides information

on the status and location of the orders with the help of

tracking services. It allows an online-shop to track their

goods, and the buyer — status of his order.

• Factoring. In cooperation with a creditor bank order ful-

fillment operator provides his client (an online store) with

the funds for an order before receiving payment from

a buyer. This reduces the time of waiting a payment to

be made. An online-shop will receive the payment with

a deduction of the deliverer commission.

• IT-services. They include creating a website or revision of

the existing one, integration with order fulfillment systems,

accompanying the online-shop, its promotion, taking care

of the integrity and relevance of the product database.

• Online-shop analytics. Different analytical reports are avail-

able online or sent on a constant basis. Possibility to pro-

vide additional information that is not provided in the ordi-

nary analytical reports at client’s request.


CASE

How switching to a fulfilment operator increased sales

PROJECT BENCH-MARK DATA

Client — RALF RINGER

Online-shop Ralf.ru was launched on August 22, 2014, and

was served by the company’s own resources.

CMS — Bitrix.

The total number of SKU on sale in the online-shop is 7,000

SKU Spring-Summer, Autumn-Winter (Men’s, Women’s).

SKU is an item of one given article in a given size and colour.

A change to the colour and/or size and/or article creates a new

SKU.

The total number of models in storage is 1,200 items.

The average order in rubles (including VAT) is 3,224

The average number of items purchased per order is 1.3.

Delivery is by TopDelivery.

Systems — TradeX / Technoclass

Average percentage of returns is 22% of the total number

of orders.

PROBLEM

Launching the online-shop in test mode, we expected that

problems would arise in the process of number of orders

increasing. The most important question was what number of

orders would become critical?

A local courier was chosen for deliveries, with a good regional

network and delivery in Moscow through a partner.

Goods were dispatched from our wholesale warehouse.

First problem area. The process of getting an order, its

processing by an operator, and sending it for collection must

be as automated as possible and avoid multi-step manual

operations.

www.ralf.ru

RALF RINGER is the largest

manufacturer and retailer

of shoes in Russia. Since the

company was founded in 1996

its production has expanded

by a factor of 45 — from

30,000 pairs per season in

1996 up to 1,450,000 pairs

in 2014. The distribution

network includes more

than 1,500 retail sales points,

including more than

130 dedicated shops.

RALF RINGER produces

men’s and women’s shoes at

its three factories (in Moscow,

Vladimir, and Zaraisk). The

production facilities are

equipped with the most

modern technologies.

They use the best materials,

parts, and equipment.


A confirmed order of the online-shop must be sent straight

to the warehouse for selection. Unfortunately, at that time the

operator had to perform 20 manual operations before the

order was send for selection the following day.

Second problem area. The warehouse must “know” how

to work with piece goods. This is a key function for an online-

shop.

The speed of online-shop’s turnaround depends on how

quickly a warehouse can collect orders, package them, print

basic documents, and dispatch the orders to a courier.

Another pinch point is receiving partial returns from the

courier. If the warehouse does not have barcode systems,

you cannot quickly and properly identify the item which has

been returned. Mistakes will be made Manual operations will

cause errors, which with increasing numbers of orders can

lead to serious re-assorting.

Results of work with our own resources between October

2014 and March 2015:

• total number of orders — 2,229;

• cancelled — 35%;

• sent — 64%;

• returned — 22%;

• delivered — 50%;

• share of expenses on delivery to the Turnover — 39%;

• average order in pairs — RUB 2,573.

We were able to deliver only 50% of orders, and we had a

very high percentage of cancellations.

Based on the year’s results it was clear that many processes

needed optimising and serious investment, a service provider

who would take on all the online-shop processes was required.

SOLUTION

In January 2015 an agreement was reached on cooperation

between eTraction (a member of the Otto Group) and RALF

RINGER, and integration work began.

Yuriy Fomin, head

of the RALF RINGER

online-shop


From April 2015, eTraction has been providing RALF RINGER

with services on warehouse management, processing, storing

and sorting goods, packaging and shipping orders, full cycle

of returns work, integrating services of the contact centre and

delivery companies.

For RALF RINGER, eTraction uses the production capacity

of its parent company, Otto Group Russia, which occupies

a leading position on Russia’s distance selling market in the

fashion sector. The group’s logistics systems process more

than 17 million orders per year.

With support from eTraction, deliveries for the RALF

RINGER online-shop http://ralf.ru are carried out by courier

companies DHL and DPD, Russian Post, and also by Pick Point

postal points.

Since August 2015, eTraction has been providing RALF

RINGER with services in online marketing, including placing

contextual advertising, referral marketing, and working with

abandoned baskets.

RESULTS

For 7 months For 4 months

Own resources еTraction Change

Total orders jd 2,229 2,000 -10.27%

canceled jd 35.22% 10.65% -72.87%

sent jd 64.78% 89.35% 23.75%

returned jd 22% 15% -32%

delivered jd 50.53% 75.95% 34.86%

• Goods turnover increased 65%.

• The average order was RUB 3,020.

• Expenses on fulfilment in Turnover — 45.8% (+15%).

Evgeniy Schepelin,

CEO

eSolutions/eTraction


Turnover dynamics:

‘‘ Our main aim in founding the RALF RINGER online-shop was to offer

our customers the broadest possible choice from a wide range of shoes

(for all seasons), since in most of our partner network and several of our

own retail outlets we are not able to offer this full service. By joining forces

with eTraction, we were able to expand the areas we cover, and to offer

the opportunity to purchase our shoes in all corners of Russia.’’

Yuriy Fomin, head of the RALF RINGER online-shop

‘‘ Retail doesn’t always see the additional opportunities for developing

ecommerce business with strong partners. It seems clear that a fulfilment

operator can only lower expenses on logistics, but we can hardly forecast

the potential growth, as well as see the reasons for this growth.

The influence of higher quality processes on customer satisfaction,

the number of repeat orders, expanded sales area, special offers and

discounts, and opportunities to open dialogue with supplies to a completely

different level.

We are glad that Ralf Ringer has opened its details to the market and

is showing that growth is possible not just by optimising expenses. If you

look at the growth dynamics of our clients, we see a doubling of good

turnover. Based on the year’s results we have sent the millionth parcel

for our monobrand projects. And we continue to show two-fold growth.

Evgeniy Schepelin, CEO eSolutions/eTraction


Benefits of a third-party order fulfillment

1. Order fulfillment easily scales the client’s business and

withstands seasonal sales jumps. It is able to pass through

itself a peak load of an online-shop not losing service

quality.

‘‘ A high-quality order fulfillment company has a professional approach

to managing seasonal jumps. Seasonal peaks, sales periods can

simultaneously increase the daily volume 5-10 times. When processing

large volumes, it is important to have reliable tools for a quick buildup

of capacities. At the moment, we are ready for peak loads up to 100,000

orders per day. And this is not a potential capacity but an actual result,

that we used to operate before.’’

Evgeniy Schepelin, CEO eSolutions/eTraction

2. Sales growth. This is a result of an easy scalability, business

extensibility. Order fulfillment operator deals with logistics,

works under his client’s loyalty. The online-shop is engaged

in advertising and promotion, without being distracted by

background processes. As a result, there is a growth of the

company by increasing the volume of shipments.

‘‘ Interests of an online-shop and an order fulfillment company lie in the same

plane and are focused on increasing the number of orders. Therefore, each

one in this situation carries out a set of actions, which as a result should

lead to a high quality and in-time delivery to the end-buyer.’’

Sergei Volchkov, Director of Sales, Service Express Courier

‘‘ Once decided to work with a serious order fulfillment partner,

an online-shop can from the beginning use processes developed by

the best international practices, offering high-quality customer experience,

economies of scale of an experienced player and not to waste time and

money to run its own operations.’’

Zhiltsova Alexandra, Director, Lamoda B2B

Outsourced order fulfillment service vs in-house fulfillment service



3. Lower delivery cost. Order fulfillment is not engaged in

delivery processes by definition, although, on the market

there are more and more examples when handling and ship-

ping are concentrated in one company. If analyzing these

processes separately, an online-shop will now have two

cost items: fee for order processing and order delivery. As

fulfillment companies send to the delivery services a great

volume of items and receive a partner discount, they could

spread the discount within their customers, not earning on

shipping services.

‘‘ This is true. Our company has a production capacity that allows us attract

a large number of services of our clients. As a result, passing «big volumes»

of orders to external delivery services we can expect significant discounts.

Undoubtedly, we are sharing them with customers, and it’s not the only

advantage of our mutually beneficial cooperation.’’

Konstantin Kalinin, Chief Commercial Officer, order fulfillment operator «Beta PRO»

4. Higher quality of service at the start. The area of order

processing and logistics is very significant for ecommerce

business, but e-shops are not supposed to be experts in it.

Forming their own processes takes time, knowledge and

experience in various aspects of logistics — warehousing,

routing of cargo and people, processing of orders, the last

mile, software, logistics processes, legislation in the field of

logistics, etc. Small companies cannot afford themselves

to open a logistics department, and one or even more

people are not able to be responsible for all parts of the

logistics chain with the same quality. For large companies

their own logistics department means great expenses es-

pecially on the start. Outsourcing logistics processes to

experts in this area, a company gets higher quality service

while saving expenses (operating costs of a fulfillment op-

erator to process one order are lower because of already

adjusted business-processes), and not less important,

focuses on their own expertise — business development.

Order fulfillment operators

deliver to courier services

large volumes of items and

get partnership discounts

that they can pass on to their

customers, not earning on

shipping.



‘‘ No doubt there are some successful examples of the companies developing

own fulfillment and logistics. But, as a rule, developing these spheres

in such company leads to a problem of cost compensation of these

expensive functions. Actually, that’s how certain business lines appeared:

Otto — “E-Traction”, “Studio Modern” — ”Route”, OZON — “O-courier”.

It was necessary to compensate great expenses. It is too soon to evaluate

success of these projects, or too late if we speak about O-courier, meaning

profit equals success. Although even if they are profitable, they are rather

the exceptions proving the rule — do only what you can do the best.

And for online stores it is definitely not logistics and fulfillment. It is no use

to sacrifice development to the expanding operations!’’

Sergey Egorov, Chief Commercial Officer, CDEK

‘‘ In my opinion, the focus for online retailers should be on developing their

relationship with their customers. Managing the complete supply chain can

limit their capacity to grow and divert their limited resources to non-core

activities. This is why outsourcing order fulfillment is so popular abroad. In

Russia, this understanding is just appearing and will continue to grow as

companies develop.’’

Maria Zaitseva, Development director of the B2C services in Russia, SPSR-Express

5. Automatic calculating of shipping costs. For online-shops,

especially for small ones, it is hard to specify the cost de-

livery to the end customer. To calculate the cost correctly

you have to know physical and /or volume weight of the

packed order and the rate to calculate final delivery price.

Order fulfillment companies have technical maintenance

for automation of this process. This allows to count instant-

ly and show results on the web-site.



‘‘ Not every order fulfillment company can boast the presence of the normal

package of delivery calculating scripts to be integrated into client’s

shipping cart. Best-case scenario for online-shop is to implement its own

delivery cost calculation system into a fulfillment operator’s API for tariff

calculation. In the worst case, an online-shop is askedto solve this problem

by itself. The problem is that this is not a technical, but an IT problem, and

these are programmers who are supposed to solve it. Because calculating

the delivery cost starts before an order fulfillment gets the order. Yes,

you can later size and weigh the order, but the end-customer already

has the price stated, and you have to deliver within the price already

announced.

Nevertheless, we have ready-made scripts and API for integration of deliv-

ery tariffs into our customer e-cart. It is a source of constant headache for

us. As the necessity for such IT-solutions is huge, we will continually devel-

op and improve it.’’

Dmitry Novikov, CEO, Reworker

6. Order fulfillment — is a growth point for the regional on-

line-shops. A regional online-shop faces a number of dif-

ficulties when It plans to enter a Moscow market. The rent

price, search of a delivery company, transporting goods

from providers — and all this should be managed remotely.

A good decision is to organize an «one-window» service

with an order fulfillment company who will take care of all

necessary processes.

‘‘ In the last 1.5 years we note the significant increase of interested entrepre-

neurs from regions and CIS countries. They have been successful in

the region and are ready to expand their business to the whole country.

They have all experience; the only question left is logistics.’’

Alexander Alimov, head of the project, Call-IM



7. Order fulfillment operator can provide his clients analy-

tics on the orders. Processing huge amounts of information

daily, he can store, systematize and analyze it. In addition to

analytics, order fulfillment operator provides his clients

a variety of IT-systems. Integration with the existing system

is much easier than development or purchase of your own.

‘‘ Data analysis really allow us improve the service, but one more crucial

thing – feedback from partners. Versatile experience, business specifics,

diversified target audience — give us the opportunity to learn, and we have

a distinct competitive advantage.’’

Evgeniy Schepelin, CEO, eSolutions/eTraction

8. Order fulfillment partner centrally collects the goods. If an

online-shop works directly with several delivery companies,

each courier arrives for their orders and everyone has to be

paid. An order fulfillment company picks up all the online-

shop orders and distributes them between couriers inde-

pendently, saving time and facilities of his clients.

‘‘ This scheme works well when it comes to online stores that outsource

delivery of ready-packed orders and distribute volumes between several

partners: by geography, to be delivered to the door, to parsel shops,

postamates or the Russian Post service. All the online-shop is required

to do is to pass all the collected orders to a driver-courier. But there is

a process to be realized BEFORE and AFTER that point. From passing

parcels to the packaging team and up to delivery to different courier

services — all the processes including IT and technological ones should be

properly organized: it is necessary to set up a pick-up point to redistribute

packages, which are brought by driver-couriers. And it should be a well-

functioning process not to violate delivery terms. It is much more efficient

to organize it at our site, since we work 24/24 and have high-volume

production capacities. For example, the logistics team collects all the

orders in the afternoon. They are processed and distributed during the

evening and night, and are transferred to the delivery service by a schedule

and agreement with the courier service: at a certain appointed time to the

regions, to Moscow and Moscow Region at another appointed time, and

at a certain time to parcel shops and postamates. And at each stage the

online-shop should be able to track the order.’’

Oksana Smirnova, director of the Commercial Department, ZAO «Distance Selling Service» (Distance Selling Service, JSC)


CASE

Experience of a small online store in choosing an order fulfillment partner

Start of the project

The first six months of my online store I was in charge

of everything myself: receiving calls, coordinating orders,

packing them, passing them to the courier delivery and even

sending them by the post service.

As the number of orders started growing and achieved

the number of 5 per day, I realized that I would not cope by

myself. After browsing the internet and counting all the op-

tions, I came to a conclusion that the order fulfillment is right

for me — it was ideal in terms of price-quality ratio.

Search of an order fulfillment partner

As I started studying the order fulfillment market (it was

about 2 years ago) I decided to cooperate with a small Moscow

order fulfillment operator. Unlike the giants, this company

didn’t have negative user reviews, and at the start I was in-

terested in the cheapest rates for small volumes. The decisive

factor for me was the price.

The call center made mistakes at every turn: pre-paid

orders were shipped as cash-on-delivery, there were constant

mistakes in order equipment by managers (when transfer-

ring them from the admin area in their file) and warehouse

employees were confusing nomenclature. If customers had

questions that the call center could not answer, I received

e-mails. We can only guess how long did it take a buyer

to get answers to their questions. Reports on the work done

I received in a MS Word format. After a month of cooperation,

I cancelled the contract with them, but the idea of order fulfill-

ment would not let me.

I switched to another order fulfillment company that was

a little larger than the previous one. I found a few reviews

on them, practically without negative ones. The decisive

www.american-cosmetics.ru

Victoria Karetnikova, CEO


factor was again the tariff at the lowest price. I liked a lot

in their work: close interaction with the call center — every

manager wrote or phoned in Skype if he had questions, ware-

house employees also called if they had doubts about the

order equipment. Another partner change occurred 9 months

later after a number of call-center errors: they made mistakes

when copying orders from online-shop admin panel to their

Excel-file, very often they said they could not get through to

the customer, as a result the orders where not confirmed by

the buyers. And the most important reason was that the

reports on the work done were practically absent. The Excel-

file, containing my orders, was not always relevant, and the

cash received at a pickup point did not have any reference to

the amount and type of goods sold.

The result

During the last year I work with Fresh Logic. I’m fully satis-

fied with the work of their warehouse as they have all pro-

cesses fully automated, goods are registered and shipped by

bar codes, they have a storage system that allows me to see

online status of my orders, thus mistakes in the order equip-

ment occurred just few times. I am not fully satisfied with the

work of Call-center: managers still do mistakes transferring

orders from admin panel to their warehouse program. They

also could not distinguish orders for Moscow region from

those for Moscow and charged delivery equally, as a result, we

suffered losses. Today we are working on a new contract with

CallTraffic, who is also a partner of Fresh Logic, I’m looking

forward to a long cooperation with them, because replacing

a call-center is always felt badly by my clients and me as

a manager. Logistics is distributed between 3 partners —

courier service for the delivery of Moscow orders, delivery ser-

vices aggregator (Ddelivery) for all Russia delivery (express

delivery, pick orders’ points, Russian Post service) and a partner

sending mail orders all over the world. All this is included in

one contract with the order fulfillment agency, all orders are

also documented in the same program. Fresh Logic sends its

couriers to pick my orders and to tranfer them to the delivery

services. It is absolutely free of charge for me.


Pros and cons of working with a small order fulfillment

agency:

Pros:

1. Order fulfillment is much more convenient and cheaper

than renting your own warehouse + paying your staff.

2. Call center is much cheaper. For the same money you can

hire just one person, or pay a partner with a call center staffed

by many operators and a multi-line phone available 7 days

a week.

3. If they have a CRM system, the call center can provide

you analytics on each customer (buyer’s data, the number of

times ordered, how many returns, etc.).

4. 2 working schemes with the call center — a fixed price

for the number of orders not exceeding the set one, or charge

for each order. The second option is more preferable, as it mo-

tivates employees to increase the number of orders.

5. An order fulfillment agency or a call center are inter-

changeable. Change an order fulfillment agency is much easier

than firing and hiring your employees.

Cons:

1. A hired call center is not as high professional in consult-

ing buyers in specific segments, such as cosmetics, but con-

sultations are not always necessary. Customers calling in an

online-shop, usually already know that they are going to order.

2. Control of work results is not the same as you would

do on your own capacities.

3. An online-shop needs constant analytics, for example,

the turnover of the warehouse, information about the quantity

of each unit. Not all agencies, especially the small ones, can

provide it.

4. An order fulfillment agency does not have packing boxes,

suitable for small-sized products. That is why these orders are

packed in boxes of inappropriate sizes, they are much bigger

that their content. Of course, you can use your packaging.

5. Small order fulfillment agencies may be not effective in

orders dispatching, it may take them about 2 days to equip

and send an order to the post office/delivery service.


During this time, I made the following conclusion — order

fulfillment service should be present in my business model in

future, it allows me to grow rapidly at the beginning of the

business and to develop further.



Cons of outsourced order fulfillment

1. Loss of flexibility. Often an online-shop feels necessary to

modify for their own needs the ERP system which is the

core system for the order processing. However, there is no

guarantees that an order fulfillment agency will cope fast

or will agree to do it. It is unprofitable for them if other

customers do not require these changes. Moreover,if there

is a controversial situation, the store find it out from the

order fulfillment operator, rather than directly from the

customer or a courier service. In this case, an online-shop

reacts slower on urgent situations, where its interaction is

necessary.

‘‘ Of course, it is not profitable for an order fulfillment to be adjusted to each

client, modify his ERP-system etc. This is time- and money-consuming. This

is why the majority of the order fulfillment companies offer universal solu-

tions with a minimal “revision” for each system. However, when an impor-

tant e-commerce player is looking for a partner, an order fulfillment agency

will be ready to be adjusted according to the client’s needs. Concerning

the response time, it’s simple — it depends not from the company, but

from the personality of the manager.’’

Elena Ivanova, Project Manager e-Commerce, Fresh Logic

2. The loss of individuality. The outsourced staff is not

involved in store development; they do not have all neces-

sary knowledge or incentives. A courier of a third-party

delivery company will not transport goods in a branded

car, will not recount the buyer interesting details during

a purchase, a call-center employee will not be able to advise

on the characteristics of complex or unusual goods.

With an external order

fulfillment service an e-shop

will respond slower to

emergency situations where

its participation is required.



‘‘ The main task of the order fulfillment agency, as well as of any other

online-shop, is to process, to equip and to deliver the order to the custom-

er. Individuality is something to think over when all the other processes

are debugged and working without problems, which is a rare thing to find.

It is enough counting down the number of mistakes made in high season.

I think, online-shops have to take care of that on the first place. It is also

worth noting that a warehouse has clear objectives and clear conditions,

creativity is the work of other departments’ staff, and a warehouse or

an order fulfillment agency may just help to implement their ideas and

visions. Without the “knowledge on the subject” and “incentives”, but

clearly and without mistakes! ’’


3. Limited delivery choice. When you work in a «single

window» mode, your buyer can choose between couriers

who cooperate with the order fulfillment company. Order

fulfillment combines a small number of delivery services

or transport orders themselves. It is not comfortable as

customers do not want to limit the end-buyer (who is rather

demanding today) in his choice.

‘‘ In most cases, it is justified measure, since control over delivery and

timeliness of the order is a very important criterion to the customer.

In case an order fulfillment company has its own delivery network,

it provides a clientwith a significant advantage during the fight for

customers.’’

Sergey Volchkov, Sales Director, Courier Service Express

‘‘ One more possibility for clients is to deal with courier/delivery services

under their own separate contract; in this case, they are not limited in their

choice.’’

Kirill Vorobyev, Chief Marketing Officer, arvato


Sergey Egorov,

commercial director

www.cdek.ru

Interview with Sergey Egorov, CDEK commercial director

Who are key clients in the fulfillment market? How do they

benefit from using fulfillment? How have the fulfillment clients

changed in the past couple of years (are there any changes

at all)? Why do your clients come to you? What problems do

they solve?

There are several players at the Russian fulfillment market

who specialize in this field. At CDEK fulfillment is only addi-

tional service. Let’s say, it is an element of the ecosystem that

we create for our clients. We specialize in express delivery

of documents and goods worldwide. Fulfillment was intro-

duced in order to help our clients. We decided to use some-

how different approach: our clients are small online stores with

limited assortment. Big fulfillment operators are not interested

in small and medium online retailers, so we have sensed this

demand. We have a complex approach which is very conven-

ient — we collect, we store, we package and deliver. Recently

we have added an option of delivery to our partners’ pickpoints

(postomats) to the existing courier delivery and delivery to our

own parcel shops. Next year we are going to start pre-shipping

preparation and set up the call-center specially for our fulfill-

ment clients. Now we have around 6 000 sq.m for fulfillment

services. We are going to grow in the future.

CDEK have two types of clients: the first — Internet-shops

who need high-quality service and fast delivery of their goods

to the recipient. The second — the organizations who need sin-

gle mass shipments to their clients. It might be gifts for their

partners or advertizing materials. Why do they come to CDEK?

Because they need to send small lots of products and stand-

ard delivery is unprofitable for various reasons. They value

fast delivery, but without any warehouse expenses, which is,

of course, beneficial. We, in turn, offer it to the market. So the

client doesn’t spend a cent on a warehouse rent, extra person-

nel salary, or developing IT solutions, integrating with delivery

services.

What global changes have happened lately? More and more

big and small clients outsource their operational functional.

It is not only convenient, but also, I will repeat myself, profita-

ble. However, just 5 years ago everybody tried to develop own


infrastructure. No doubt there are some successful examples

of the companies developing own fulfillment and logistics. But,

as a rule, developing these spheres in such company leads to

a problem of cost compensation of these expensive functions.

Actually, that’s how certain business lines appeared: Otto —

“E-Traction”, “Studio Modern” — “Route”, OZON — “O-courier”.

Although even if they are profitable, they are rather the excep-

tions proving the rule — do only what you can do the best. And

for online stores it is definitely not logistics and fulfillment.

Now, when professional players who provide high-quality

services have come to the market, the tendency has changed.

Demand for services of the fulfillment-centers grows day by

day. One of the reasons of their popularity is, as mentioned

above, the fact that delivery and completing the orders are not

key functions of online stores.

The companies of online trade address us to deliver their

goods to the client. It is convenient to them, that we pick up the

goods from the supplier in short terms and without any medi-

ators. It is also convenient both to the clients, and to us to be

able to implement “one-stop shop” principle, obtaining profit

due to complex approach.

Are there any restrictions or limits of FF (depending on re-

gions, trade models, categories of goods and so forth)? Who

doesn’t need fulfillment today (but might need it tomorrow)?

There are some limits, of course. They are caused by the

goods which are being sold in Internet shops. We try not to

work with dimensional goods, and specialize in such universal

assortment positions as clothes, spare parts and accessories

for computers and phones, toys, electronic equipment, cos-

metics, etc.

Concerning our opportunities in regions, I can say, that

IT solutions are crucial here. However, we have overcome this

problem and we can provide fulfillment services in every region

of the country. We have learned and are technically capable to

control the commodity balance in any geographical location.

Although it is quite difficult, considering the fact that all the

major warehouses are located in Moscow. We have developed

such IT-software which gives the opportunity to predict the

approaching deficiency of this or that commodity in any ware-

house around the country. It is always necessary to remember

that it is easy to provide initial filling of warehouses with iden-


tical assortment, but it is difficult to keep this starting balance

later. Units from different warehouses are going to be included

in the orders which might affect a date of performance.

Now CDEK has fulfillment warehouses in Moscow and

Novosibirsk. It gives us an advantage of working both for the

European and Asian parts of Russia. Considering different time

zones, it is extremely important for our clients. We are going to

open fulfillment centers in several more cities soon. Of course,

we plan to cover the whole country. When we manage it, we

will get powerful advantage because there aren’t enough geo-

graphically developed players. And mass presence around the

country is important for some types of clients, for example,

those delivering mobile phones and smartphones spare parts.

They do not have own warehouses, but actively look for part-

ners in regions. Are there many fulfillment operators who not

only specialize in small and medium-sized companies of dis-

tance trade, but also are geographically developed?

Packaging is also very important. Often their critical vol-

ume comes unexpectedly. As a rule, it does not happen linearly.

When it happens businessmen start to estimate the volume of

the required investments to expand, they understand that it

is expensive, and start looking for partners for outsourcing.

Shortly some large retailers, who switch from offline trade

to Internet space are going to need fulfillment services. Every-

body feels that clients are redistributing gradually, sticking to

different sales channels. In order for the retailers not to lose

clients, it is necessary to be present at all these channels: retail,

online retail, mobile sales, contact centers, etc.

Fulfilment for medium and small businesses? How is that

possible? What pitfalls are there? In general who works with

the small and medium?

For small clients fulfillment is the only appropriate option

they have. After estimating the investments it becomes clear

that each point of storage requires expenses, great ones.

How much does fulfillment cost? How are these expenses

formed? What are the forms of collaboration with fulfillment

operators? What resources are required from the client in or-

der to work with fulfillment?


Cost differs. It depends on warehouse rent, staff salary

expenses, purchase of the specialized equipment, developing

necessary IT solutions for ensuring operational processes.

There could be several possible forms of collaboration with

operators. For example, cost could be calculated based on the

steps included in the package, or complex approach could be

used. Step by step calculation is possible thanks to a compe-

tent system of billing.

If we speak about mass development of the service, about

selling it to small and medium Internet shops, it is necessary

to understand that not all of them have opportunity or desire

to understand step by step pricing for the fulfillment order.

It is necessary to aspire to a simple price formation for the

“turnkey” order.

What are your company plans for 2016? What are the most

interesting and important things you are going to do? What

spheres are you going to develop?

СDEK is going to continue replication of fulfillment-servic-

es to the Russian million-plus cities. For this purpose we plan

to carry out large-scale works with our partners — to expand

geography and ways of delivery. We plan to organize the call-

center specially for fulfillment clients. Call-center operators will

deal with orders reception, replacement and exchange, con-

duct additional sales, consult on assortment, and also on deliv-

ery and packaging of the goods.

We also plan to reduce investments by organizing mini-ful-

fillment centers.

What is the most difficult thing in your work today? What

problems require most attention?

There are a lot of problems, but we are solving them

together with the clients. For example, now express delivery

and fulfillment services have separate personal accounts. It is

bad. We are working hard on uniting them. Also we are working

on forming the model of “one-stop shop”. It is when the client

solves all their issues at one place, communicating with single

expert.


The two main reasons for cooperation with an order fulfill-

ment company are reducing logistics costs and high service

quality for end customers. This can be explained by general

trends on the market — outsourcing is cheaper than the own

in-house service, a narrow-specialized company does the job

better, than an in-house department staff. Everyone who is

try¬ing to enter the e-commerce market is faced with the need

to work with piece-goods.It is necessary not only to store box-

es and pallets, but remove the contents, calculate and place

each piece. This requires specific business processes. An order

fulfillment company is able to keep a record, to store and to

complete individual items. Therefore, it provides an easy start,

business scalability, access to new markets with the same qual-

ity for both beginners and the companies with large turnovers.

Potential customers of order fulfillment services

There are three key groups of order fulfillment services

customers. First of all, these are online-shops. This is the most

numerous group today. The second group which is growing

fast combines suppliers and retail sellers without online-shops

because these companies impose similar requirements for

order fulfillment services. The third group is the foreign com-

panies without a local office in Russia. The growth of the last

group has slowed down because of the crisis and the unstable

situation in Russia. Despite this fact, many foreign companies

are planning to enter the Russian market in the next 5 years.

At the start an online-shop has no well aligned processes.

It needs a partner who will provide all possible services for

a minimal cost. Foreign companies, which also do not have

Russia-specific experience, pay more attention to the price

and the quality of services. It must comply with the policy

of promoting the company in Russia. Retail and suppliers

already have their own warehouses, logistics, IT-systems.

Basically, they need a range of services associated with the

storage and equipment of piece-orders.

All who are preparing

to enter the market of

electronic commerce are

faced with the need to work

with the piece goods.

It requires specific business

processes.

There are three key groups

of order fulfillment services

consumers: online retailers,

suppliers and off-line retailers,

foreign companies without

a Russian office.

Order fulfillment customers — who they are and what they want



ONLINE-SHOPS

This is the largest group today. It is represented by already

running online-shops and those who just plan to enter the

e-commerce market.

Primary needs

A warehouse and work in the “one window” mode are

necessary. A personal warehouse for an online-shop is expen-

sive and inconvenient. Order fulfillment partner provides all

the logistic processes: shipping and order processing, includ-

ing safekeeping of goods.

The requirements of an online-shop

for its order fulfillment partner

Online-shops impose fundamentally different requirements,

depending on their size. Large shops want their order fulfill-

ment partner to be reliable, to have good reputation and

high-quality service, small ones — that he would take a mini-

mum price and provide all the logistics processes in “turnkey”

mode. Medium-sized shops can have the same requirements

as those of the small or large size depending on their structure

and specificity.

Key requirements of the big online-shops

Major brands are very selective in the choice of the model

of work: use their own or partner capacities. All potential part-

ners pass through a strict selection. Below there are conditions

that may be interesting to a company.

1. An order fulfillment partner is not an investment pro-

ject. This means that the project should be operationally

profitable and exists by his own funds.

2. Work with all the logistics is in the “one window” mode.

This condition complies overall trends of logistics out-

sourcing. One partner is responsible for all: order-fulfill-

ment, last mile, additional services. It simplifies business

process control and lowers costs on interaction with ser-

vices providers.

Large online retailers want

their order fulfillment partner

to be reliable, have a good

reputation and high quality

service, small retailers prefer

those that take a minimum

price and provide turnkey

logistics processes.



3. Reliable IT systems. IT system should support all proces-

ses, necessary to service company’s real and planned vol-

umes and be sufficiently flexible for future revisions.

4. Clear and transparent billing. There are two popular

methods of charging order fulfillment services: paying

each operation processed or offer a percentage depend-

ing on order volumes. In the first case, each purchased

service is calculated and summed up (processing an or-

der, packing it and etc.). In the second, the customer pays

a fixed percentage of his turnover during a period. The

higher turnover is the less is the percentage.

5. Already operating business. Large company is looking

for experts in order fulfillment service, so they prefer to

cooperate with those, who already have well-organized

processes and experience in processing piece-orders.

6. Reliability. Big companies are looking for a partner for

medium- or long-term cooperation. Trusting him a signif-

icant part of his business, they expect to be confident in

the fact that the order fulfillment company is firmly stand-

ing on its legs and will not leave the market at slightest

changes of the economic situation.

Key requirements for small online-shops

1. Billing is the set of fixed tariffs or by order payment. Ano-

ther option is to provide fixed cost, which already includes

certain number of orders plus by-order tariffs if the fixed

amount was surpassed. It is very important for a small busi-

ness to keep in mind a concrete amount of money they

need to spend on processing and logistics of their orders.

2. Absence of clear risks. When starting a new online-shop it

is very important for an entrepreneur not to feel risks with

the order fulfillment services. Therefore, the latter must

provide maximum comfortable conditions and a transpa-

rent system of work.

3. A clear system of orders and returns accounting. Proper

and timely information processing is the basic competence

of an order fulfillment partner. If a client does not under-

stand how it works, he will find another partner or build his

own service independently.



4. Easy start. All customer’s intention is to change internal

processes for the outsourced capacities as fast as possi-

ble and with less pain for their business. Since the start of

the cooperation an online-shop must not be demanded any

additional, not obvious monetary investments.

SUPPLIERS AND RETAIL STORES

WITHOUT AN ONLINE-SHOP

The second group by the number of customers, but po-

tentially the biggest one in the future, is represented by retail

and suppliers who want to enter the ecommerce market. Today

there are a lot of companies that already have a warehouse and

goods and plan to start online sales as well. For online sales

they need to keep a record of each unit in the consignments.

Therefore, they highly demand the competences of an order

fulfillment company.

Primary needs

Processing piece-orders. These companies have their

own experience in managing a warehouse and maintaining

the logistics processes. A serious barrier for them is that they

do not know how to work with the piece goods. Development

of new processes, taking into account the fact that online sales

take up a small share of their current turnover, is not always

effective. Cooperation with an order fulfillment company can

help them enter a new market easily. Suppliers and retail stores

just need to ship the goods to the order fulfillment warehouse

as they do with the offline sales point.

FOREIGN COMPANIES WITHOUT ONLINE

AND OFFLINE

Foreign companies that have in their plans entering the

Russian market have two possibilities. Either they come to

Russia and build a local business themselves. Or come to

a Russian order fulfillment company with already well-estab-

lished processes and good experience with the Russian buyers.

Cooperation with an order

fulfillment company allows

online-shops to enter a new

market easily.



Primary needs

High quality service straight away. Foreign companies are

searching for a worthy “European” quality. Now the choice that

is not so big is between several order fulfillment companies

with a respectable reputation, good reviews, well established

processes and not less reliable service partners.

Expertise in the Russian market. From the very beginning

foreign companies need to understand the peculiarities of the

Russian market and correspond to relative customer require-

ments.

Customer’s order fulfillment market dynamics

1. Number of customer searching for order fulfillment ser-

vices is increasing rapidly. There are three reasons for this

fact: fast growing demand on outsourced services, distri-

bution of the information on the order fulfillment services,

improved quality of the proposed service. More and more

successful projects outsourcing order fulfillment are ap-

pearing. It proves this new model efficiency.

‘‘ Order fulfillment develops along with the customer needs, which in recent

years learns virtual space technologiesrapidly. Usually, evaluating his online-

shop potentials, the owner understands clearly that he has no power to

control all the stages of development. Logistics operations are a huge share

of the entire development chain, which today more and more businessmen

outsource to professionals.’’

Elena Ivanova, Project Manager e-Commerce, Fresh Logic

2. Large retail networks without online sales apply to order

fulfillment services in order to create and optimize all

logistics processes. At the initial stage of outsourcing it is

more preferable, as it does not require huge investment for

a warehouse, machinery and equipment, staff hiring and

training. Later, when the online-shop starts working with

the partner on the basics of established processes, natural

A worthy and decent

«European» quality — that

is what foreign companies

are looking for.



development of business involves a step-by-step transition

to his own facilities. If we look even further, when gaining

enough expertise in order processing by their own, an on-

line-shop can offer order fulfillment services as an inde-

pendent expert.

After a period of time, an order fulfillment service customer

could become a competitor to his past partner. In terms of

the market it will mean the following:

• Growing successful experience in order fulfillment out-

sourcing will popularize this service;

• Growth of the e-commerce market and the markets sup-

porting it (logistics, order fulfillment, payment systems,

etc.);

• Improving end-customer service;

• Cost savings due to economies of scale online stores.

‘‘ Development of the order fulfillment market follows the rapid growth

of the fashion retail and e-commerce in general. This will lead to a certain

boost of the order fulfillment market: giant brands would prefer to pass

management of all the process to professionals, that are well-experienced

in this field, than build massive infrastructure of departments or reinvent

the processes from the ground. The winner prize will go definitely to those

order fulfillment players that would provide full service outsource — not

partial services in logistics, call-center, delivery — taking care not only

about the quality, but also about the growth of the e-commerce business

of their partner, sharing knowledge and findings, constantly offering

optimization.’’

Dmitry Kholomtsev, Managing Director, KupiVip E-Commerce Services

Initially, outsourcing gives

more benefits because it does

not require huge investments

in storage, machinery and

equipment, hiring and training

of personnel. Later, when the

shop is already working with a

partner on a reliable scheme,

natural development of the

business requires a gradual

transition to its own facilities.



3. Cooperation with a big online-shop partner is ambiguous

for an order fulfillment company. On one side, a logistics

partner strengthens its reputation, gains prominence in the

market and receives a large amount of orders. On the other,

a big online-shop is usually more demanding — it is search-

ing for a special individual approach: special conditions,

discounts, IT-system adjustments and etc.

‘‘ We have about 50 online-shops with the number of orders more than

1000 a day. The business of an outsourced company implies a skillful

infrastructure management and correct balance of its workload. Of course,

the more the flow is dispersed, the more possibilities of control it provides.

However, it’s a big mistake to think that a small customer gives bigger

margins. Of course, he will not ask for volume discounts, as any big client

will, but his maintaining costs are slightly cheaper than those of a large

client. So if we account order fulfillment company profit for one executed

order, it may happen that a small customer brings less money than

a big one with a good discount. Therefore, as any outsourcing company,

the fulfillment operator needs to have a balanced customer’s portfolio.’’

Alexey Zhukov, expert


Order fulfillment market dynamics

Factors stimulating market growth

1. The growth of e-commerce market. The growth of the

Russian e-commerce turnover is followed by an increasing

demand for order fulfillment services due to the growing

number of processed volumes, the appearance of new

customers.

2. Growing concurrence on the order fulfillment services

market. There are more than 40 000 online-shop companies

in Runet and only 30 companies on the order fulfillment

market. The number is small, they are segmented by size

and product categories. Today they are not stimulated to

improve the quality of their service, the market is developing

not quickly enough, but new projects that appear influence

positive on market on the whole.

3. Outsourcing secondary business processes. As the culture

of outsourcing business grows, it creates a favorable

environment for development of order fulfillment companies.

Market growth constraints

1. Online-shops do not have confidence in the order

fulfillment companies. They do not understand that an

order fulfillment company is really interested in helping

a shop to develop and improve its processes, because in

that case the order fulfillment company will evaluate as

well. The formula is very simple: the growth of an order

fulfillment company follows the growth of the online-shop

it serves. Russian market is slowly moving towards partner

relationships, this kind of relations is the driver of growth of

e-commerce and related markets.

The RuNet comprises more

than 40,000 e-shops, while

there are only 30 order

fulfillment companies

on the market.


42


‘‘ There is no confidence because the market is not well-formed yet, and,

to my point of view, is neither civilized nor highly competitive. If we

compare the order fulfillment market with the rest logistics market, we

can see that the overwhelming majority of online retailers have absolutely

no clear requirements neither to the quality of operations, nor to the

conditions of storage. There do not exist strict view on the efficiency

of the warehouse key operations performance, or even to the presence

of insurance guarantees of a warehouse towards his customer. Moreover,

there does not exist the culture of service procurement on a competitive

basis. Most of the order fulfillment companies coming from the retailers

themselves are not used to disclose the cost of their services or show

the so-called «open book». Individual order fulfillment services can afford

themselves dumping the prices at the start, trying to increase tariffs later

and revise the commercial terms. The reason of this kind of behavior

is the fact that the market is still very young.

Here in Itella we vote for rising up civilized and transparent approach in our

relationships between an order fulfillment company and online-shops, and,

as a consequence, for the development of the entire e-commerce market.’’

Dmitry Lobanov, Head of E-commerce, Itella Russia, Posti Group

2. There is no understanding on the market that order

fulfillment services could be outsourced. Many online-

shops have never heard about the order fulfillment services.

They do not know what they have to look for, where it could

be found, whom they should ask. In particular, this is relevant

for small and starting online-shops. Russian order fulfillment

service is gaining popularity and becoming accessible for a

growing number of clients. The price of services, which used

to be unreasonably high, is going down. With the growth of

competition, the price for services will continue to decrease

while quality will be increasing.

‘‘ There is a big enough choice of order fulfillment companies on the market

and customers can easily find all the information they need. Another thing

is that they do not know what are they looking for, and often confuse

courier and order fulfillment services. An online-shop should first decide

on their requirements: find a delivery partner or a partner who will be in

charge of warehouse management with further delivery services, then

Internet will provide you with all the necessary information.’’

Yaroshevskiy Pavel, CEO, Yambox



‘‘ We provide a full cycle order fulfillment services since 1997. I would not

say it is a young service. Another thing is that the need for outsourcing was

evident to large catalogue retailing companies, and all the services were

focused on them. About three years ago the efficiency of order fulfillment

outsourcing became evident to medium and small businesses and thus

the demand for such services has appeared. This led to the adaptation

of the processes for small companies’ requirements. It is too early to talk

about growing competition, as the number of companies providing order

fulfillment services is too small, and it is very expensive to organize such

a business from scratch.’’

Matvey Kozlovsky, CEO, B2CPL

3. A few players provide a transparent pricing scheme. As

an order fulfillment company proposes a huge quantity

of services, it has a lot of price lists with a variety of sub-

conditions. It scares and discourages a potential customer,

who is afraid, that he will be deceived or shortchanged.

Creating a simple, clear, comprehensible services billing —

is the key growth point of the order fulfillment market.

‘‘ If we speak about mass development of the service, about selling it to small

and medium Internet shops, it is necessary to understand that not all of

them have opportunity or desire to understand step by step pricing for

the fulfillment order. It is necessary to aspire to a simple price formation

for the “turnkey” order.’’


4. Even if a client understands price formation, he still does not

know how much he will have to pay at the end of the month.

Pricing depends on the amount of orders and services

required for their processing. Online-shops do not want to

rely a substantial part of their business to another company

on condition that they would not know in advance the cost

of services purchased. Concrete figures is a landmark for

entrepreneurs or management, while an approximate cost

is a significant barrier to cooperation.

Appearance of a simple,

clear, understandable services

billing system is an order

fulfillment market growth

point.



‘‘ As a rule, clients usually pay attention to two main parameters about

warehouse services - the cost of storage and the cost of packaging of the

order. If these two parameters seem appealing, please, specify, how much

reception and marking of goods, dealing with returned orders, inventory

and balance tracking would cost. Having put everything together, added

the approximate volume of storage and multiplied by number of orders

a month, you will be able to understand total cost of warehouse services.’’


5. It seems to be an easy question « to outsource or not».

It should be solved by simple calculation options. In practice

online-shops face two problems. They do not know how

to calculate their operating costs per one order. You

must take into account the impute of several employees,

petrol spent for delivery, packaging materials, etc. Or they

calculate all this but incorrectly. Companies handling

order fulfillment operations can help with this part. They

often provide consulting services and can help with correct

calculations.

‘‘ There are a lot of expenses, which people do not take into account,

but they can result in big spending. In this case an ordinary calculator

and your experience and knowledge of these small expenses can help you

make correct calculations. An order fulfillment manager can tell his client

which costs should be taken into account and, which is not less important,

in which sequence. In addition, there are many issues that influence the

order processing net costs as well as online-shop’s quality. For example,

number of errors during orders equipment (items of different size, not

totally equipped order, etc.), number of errors when sending orders

(mixed labels, address mistakes, etc.), cost of packaging and consumables

(paper, ink cartridges, etc.), cost of order intake by delivery services,

problems and errors due to the incorrect remnants estimation. These

and many other direct and indirect costs affect seriously the cost

of a single order processing, but not all of them are taken into account

to reach the net costs.’’


6. Few order fulfillment companies automate warehouse

processes. Now the volume of the automated warehouse

processes is not high. It exists, but people still play the

significant role in the majority of warehouses. Large order



fulfillment operators try to minimize human errors by

automatizing all the processes, but these investments are

not reasonable. When Russia has an unlimited access to

cheap labor, it is more effective hiring workers (people who

will be in charge of manufacturing operations and those

who will evaluate their quality) than to replace them with

specialized equipment.

‘‘ If we face an inability of the automation process that means, as a rule,

insufficient number of operations performed in a particular production

area to make this automation efficient.’’

Kirill Vorobyev, Chief Marketing Officer, arvato

7. Order fulfillment niche of oversized orders is empty.

There are no available infrastructure and technology that

will allow to service oversized orders. There are no order

fulfillment companies that would be specialized in this

sector. We can find some new projects on the market,

but they are relatively recently launched to estimate their

success. There are just some courier services that deal with

the last mile of the oversized goods, and even less of those

who can do it on a high level. Russia lacks infrastructure for

a reliable transportation of oversized goods. It also requires

a specialized loading and unloading equipment. Order

fulfillment companies and courier services count oversized

orders as not profitable. This is a low-margin and a tech-

nically difficult segment.

The future belongs to the online-shops that deal with

oversized goods. They would not find solutions for their

problems on the market, and they are the only ones who are

interested to make these decisions appear. Therefore, they

would have to build their own processes and to become

a growth driver in the oversized segment.

Order fulfillment companies

and courier services prefer

not to work with oversized

orders because it is a low-

margin and technically

difficult segment.



‘‘ Outsourcing services appear on the mass market in the segments where

there are many players, a lot of operations, and therefore it is possible to

use the economies of scale. If you look at the structure of distance selling,

the segment of oversized goods is not the biggest both by the number

of transactions and the number of players. But it requires another infra-

structure, other processes that are difficult to adapt to other «standard»

product categories. Balancing capabilities of an order fulfillment company

who has decided to start working with this segment, are reducing.

Therefore, the competence of working specifically with oversized goods

is a very rare phenomenon on the young market of outsourcing order

fulfillment services. Basically, order fulfillment companies agree to start

working with the oversized goods when it is a small part of their big client

assortment and this client will not cooperate if he will be refused to process

orders of this type.’’

Alexey Zhukov expert

8. Absence of standard IT solutions in Russia. The majority

of order fulfillment companies work on a self-developed IT

infrastructure. If a client is proposed a standard package,

it is usually a delusion, that is not a customer-oriented

approach, that is why it is not good.

‘‘ Even a standard IT-solution is a serious investment. The software we find

in an order fulfillment company is usually an in-house development, or

a software acquired for a particular project. In both cases, the client often

gets the processes that someone has already determined for him and they

are not supposed to be changed or revised. In other words, the customer

receives the fulfillment procedures with a local software without any pos-

sibility to modify them, at least during the period of the contract. Profes-

sional order fulfillment companies such as Itella, can afford using extremely

expensive industrial solutions (with a license cost of tens of thousands of

euros) that allow you adapt the processes for each customer without making

changes to the basic logic of the software, but with the help of numerous

settings. Effective use of such highly flexible systems is ensured by the fact

that professional operators provide services to a large number of customers,

and in terms of a single operation software costs took only a small part.’’

Dmitry Lobanov, Head of E-commerce, Itella Russia, Posti Group



Trends

1. Order fulfillment company is an aggregator of the last

mile. Experts confirm a great demand of expansion of

delivery services included in the fulfillment package and

order fulfillment companies start integrating new delivery

options. Today the choice is limited: a few federal courier

services, parcel shops, postamates, Russian Post. Online-

shops do not want to limit their buyers in choice and are

waiting for integration of a bigger amount of delivery

services, postamates and parcel shops.

‘‘ Our clients are interested in the choice of the optimal time and delivery

cost depending on the region, as well as the ability to quickly switch the

delivery of orders from one courier service to another. A client wants to

manage the delivery effectively. As a fulfilment partner, we can propose

him that opportunity aggregating a set of courier companies.’’

Yaroshevskiy Pavel, CEO, Yambox

2. The market is moving to one single contract with a reliable

outsource partner for all background processes, including

order processing and delivery, instead of a number of

contracts with a group of actors.

‘‘ For the first time we noticed this tendency on the market about a year ago.

We complemented our core service of express delivery with fulfillment

and call-center services. But the degree of market confidence in fulfillment

is different — while everyone is already accustomed to the fact that

the delivery should be outsourced (with a wide range of services, high

competition, clear and transparent price conditions), the fulfillment rests

a complicated proposal and we can expect a high demand on these

services in two or three years. Warehouse management and transport

logistics are quite different businesses, and I do not expect in the nearest

future, appearance of a large number of companies that will provide such

services in a single complex.’’

Matvey Kozlovsky, CEO, B2CPL



3. Sale of goods by the Russian online-shops abroad, pri-

marily in the Eurasian Customs Union (EACU) and the

Commonwealth of Independent States (CIS). The govern-

ment softened the laws that should be the starting point for

growth not only for e-commerce, but for the order fulfill-

ment market.

‘‘ Indeed, the government has met Russian e-commerce demands and

softened export legislation for a post-delivery channel. This measure will

push a little development of e-commerce export direction. But we realize

that e-commerce is just a distribution network. It has nothing to do with

producing consumer goods. Growth of production of Russian competitive

goods could become a real motivation for this direction development.

Nevertheless, we are ready to offer our customers options of sending

goods through the Russian Post worldwide even now.’’

Oksana Smirnova, director of the Commercial Department, ZAO «Distance Selling Service» (Distance Selling Service, JSC)


Market players

Overview

The order fulfillment market has not been formed yet. There

are about 30 order fulfillment companies on the market, and

only about 10 of them play a noteworthy role. Such a small

number of players represents an extremely immature state of

the market. Many companies focus on certain product catego-

ries; some niche segments are empty. We divided all players

into groups by size and type of main activity.

1. BY SIZE:

a. Big order fulfillment companies (from 20,000 sent par-

cels per month).

• Resources: high potential growth because of the auto-

mation of processes, managing big warehouse spaces,

knowledge of the market.

• Core-features: searching for long-term cooperation,

focus on quality of the service.

• Capacities: high, not loaded.

• Clients: not many, have a brand.

• Competition: weak.

b. Average order fulfillment companies (from 5,000 to

20 ,000 sent parcels per month).

• Resources: partially automated processes.

• Core features: middle-sized clients (not more than

5,000 orders per month).

• Capacities: average.

• Clients: a lot.

• Competition: average.


Market players

50

c. Small order fulfillment companies (up to 5,000 sent par-

cels per month).

• Do not have: automation, integration of large ware-

houses systems.

• Core features: attract as can many clients as possible

by all means, an easy start for a client.

• Capacities: low.

• Clients: a lot.

• Competition: strong.

Characteristics Small Average Big

The size of the warehouse, m2 Up to 1,000 1,000–20,000 20,000

Number of clients different a lot small (up to 50)

Integration no partially yes

Automation no partially yes

Easy start yes medium no

Focus on long-term cooperation

no Rather yes yes

One window no yes yes

2. BY TYPE OF MAIN ACTIVITY:

a. Order fulfillment companies. The basis of the market is

created by the companies that are specialized in providing

order fulfillment services. Development of e-commerce will

be followed by a growing demand of quality services.


Market players

b. Courier companies. Many courier companies, following the

customer demands, open their order fulfillment depart-

ments. This is a “reduce risks” strategy to strengthen their

position on the logistics market. The main difference is that

they deliver parcels through their own courier company,

not through third parties. Courier companies with an order

fulfillment department is the fastest growing group today.

c. Third-party logistics (3PL) providers. 3PL have an experi-

ence in storage services, but the e-commerce market is still

new and unfamiliar for them. They do not have well-fixed

processes on the start and lack piece goods storage expe-

rience.

d. Online-shops. Online-shops that have constructed their

own logistics processes to optimize warehouse costs offer

their storage capacities as a platform for processing orders

of other stores.


Market players

What happens to the players?

1. An increasing number of players in the market. The increase

in the number of players is mainly due to 3PL providers and

courier companies. The 3PL companies have warehouses

capacities and a customer base. This is an important basis,

but processing piece goods and wholesale orders differ

a lot. Courier companies are entering a new market,

following demands of their existing customers. Recently,

a new type of players appeared — online-shops providing

order fulfillment services. Entering the order fulfillment

market is an extra income and savings on the volumes. And

his customers receive well-running processes and a high

level of service.

‘‘ Lamoda developed its own infrastructure to be able to offer their

customers a level of service that cannot provided by third-party order

fulfillment companies. Today, the level of Lamoda service is unique and

of a high demand on the e-commerce market, so we decided to develop

the B2B channel. We offer our partners to use our expertise and capacities,

to provide our company as well as our partners, economies of scale.

This type of cooperation also helps to strengthen partnership with existing

and potentially new Lamoda suppliers.’’

Zhiltsova Alexandra, Director, Lamoda B2B

2. The two opposite but equally popular trends are traced.

During the crisis period,some of the order fulfillment opera-

tors preferred narrow goods segmentation, while others,

on the contrary, searched for cooperation with customers

in different segments. Some segments are easier to work

with, since all the processes based on the characteristics of

goods are running well (storage of goods of the same type

in the cells, transportation, quality inspection). However,

there are certain risks. Order fulfillment company depends

on the demand for the goods of its segments. If consumer

demand for goods is fallingduring the market turbulence,

then the sales volumes will decrease and operating costs

per an order will go up. Knowing this, fulfillment companies

prefer to have in their portfolio customers of the same seg-

Number of players increases

due to 3PL providers,

courier services and e-shops.


Market players

ments but with a different positioning, so that the demand

for these products will change in different ways depending

on seasons, type and cost of the goods.

‘‘ Indeed, there are two clear trends in the market place today, and both have

a right to exist. There are less narrowly focused companies than ones with

an extensive profile. The latter will have a greater expertise in the market.

They understand the specifics of different customers and can develop the

most effective solutions.’’

Maria Zaitseva, Head of development services B2C in Russia, SPSR-Express

3. Among the key players represented on the market, the vast

majority came to order fulfillment from neighboring niches.

These are warehouse operators, courier companies, online-

shops.

‘‘ This is often dictated by the needs of existing and new customers,

or rather a common desire to expand services and upgrade their quality.’’

Sergey Volchkov, Sales Director, Courier Service Express


Market players

Main players

Arvato

Parameter Value

Company name arvato

Web-site arvato.ru

Management / contacts

Michael Pechke, CEO;

Kirill Vorobyev, Chief Marketing Officer [email protected]

Year of foundation 1997

Number of orders per month

800,000 (including orders by catalogue)

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Cross-docking.• Returns processing.• Last-mile via courier and transport companies.• Order tracking services.• Goods quality check.• Services in the field of foreign trade.• Communication with buyers (telephone, SMS, e-mail).• Factoring.

Delivery serviceSPSR-Express, DHL, DPD, CDEK, B2CPL,

PickPoint, InPost, MaxiPost, BoxBerry, Pony Express

Warehouse size, m2 75,000


Market players

B2CPL (B2C payments and logistics)

Parameter Value

Company name B2CPL (B2C payments and logistics)

Web-site b2cpl.ru


MatveyKozlovsky, CEO

[email protected]

Year of foundationHolding — 1997

Order fulfillment direction — 2008


100,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Order tracking services.• Goods quality check.

Delivery service

Russian Post, own delivery service —courier in more than 70 regions

of Russia, the parcel shops network in more than 70 regions



Market players

Beta PRO

Parameter Value

Company name Beta PRO

Web-site betapro.ru


AlexanderAntonov, CEO

[email protected]



500,000 (with orders by catalogues)

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Last mile via courier and transport companies.• Cross-docking.• Returns processing.• Order tracking services.• Goods quality check.• Communication with buyers (telephone, SMS, e-mail).• Factoring.

Delivery serviceRussian Post, Post Beta, DPD,

SPSR-Express, CDEK, MaxiPost, Boxberry, PickPoint



Market players

Call-IM

Parameter Value

Company name Call-IM

Web-site call-im.ru


AlexanderAlimov, Projects Manager

[email protected]



60,000 (taking into account the orders and call-center)

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Communication with buyers (telephone, SMS, e-mail).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.• Web-site production and support.• Factoring.

Delivery service Grastin, Ddelivery

Warehouse size, m2 No data


Market players

Distance Selling Service (DSS)

Parameter Value

Company name Distance Selling Service (DSS)

Web-site dsserv.ru


Oksana Smirnova, director of the commercial department

[email protected]

Year of foundation2000 year the bases of the Civil Accord-

post, which includes SDT


500,000 (a directory)

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.• Communication with buyers (telephone, SMS, e-mail).• Services in the field of foreign trade.• Factoring.

Delivery serviceRussian Post, Services integrated

into APIShip



Market players

eTraction

Parameter Value

Company name LLC eSolutions, brand — eTraction

Web-site etraction.ru


Schepelin Evgeniy, CEO

Kisina Alina, Head of Business Development

[email protected]



100,000 orders (excluding items Otto Group)

Services • Call-center services.• Internet Marketing.• Storage, pick &pack. • Returns processing. • Last mile delivery management: courier delivery, pick up points, postamats. • Payment processing: online payment, credit card, COD. • Order tracking services. • Web-site production and support.

Delivery serviceDHL eCommerce, DPD, SPSR-Express,

Hermes, PickPoint, Russian Post (enclosed department)

Warehouse size, m2 60,000 — 2 complex (4 buildings)


Market players

Express RMS

Parameter Value

Company name Express RMS

Web-site expressrms.ru


Konstantin Yakunin, CEO,

[email protected], 8 (495) 240-81-14, 8 (495) 240-81-44



No data

Services • IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile via courier and transport companies.• Order tracking services.• Goods quality check.• Factoring. • Thermoregulated storage.• Oversized goods processing.

Delivery service

Own delivery service in Moscow and St. Petersburg, Boxberry, DPD, PickPoint,

Russian Post (including EMS), CDEK, Vestovoy, Axiomus



Market players

Fastery

Parameter Value

Company name Fastery

Web-site fastery.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Pick-up goods from suppliers.• Last mile via courier and transport companies.• Returns processing.• Order tracking services.• Communication with buyers (telephone, SMS, e-mail).• Goods quality check.

Delivery service CheckOut (aggregator), Bringo



Market players

Fresh Logic

Parameter Value

Company name Fresh Logic

Web-site fresh-logic.ru


Elena Ivanova, Project Manager e-Commerce

[email protected]



9,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Communication with buyers (telephone, SMS, e-mail).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.• Web-site production and support.• Services in the field of foreign trade. • Oversized goods processing.

Delivery serviceGrastin, CDEK, PEC, Ddelivery,

EMS Russian Post, Lite Call



Market players

Fulfillment.Moscow

Parameter Value

Company name Fulfillment.Moscow

Web-site fulfillment.moscow


[email protected]



No data

Services • IT-integration for online-shops.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Order tracking services.

Delivery serviceRussian Post, transport and

courier companies



Market players

IdeaLogic

Parameter Value

Company name IdeaLogic

Web-site idea-logic.ru


[email protected]

Year of foundation 2009 (in the past called «Megapolis»)


No data

Services • Call-center.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.

Delivery serviceMaxiPost, private courier service,

Russian Post, parcel shops



Market players

IML

Parameter Value

Company name IML

Web-site iml.ru


OlegFedorov, Head of «Order fulfillment»

[email protected]

Year of foundation2015 — direction of order-fulfillment

opened


20,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Provide tracking parcels. • Goods quality check.

Delivery serviceOwn courier service,delivery

to pick-up points, Post of Russia



Market players

Itella

Parameter Value

Company name Itella

Web-site itella.ru


Dmitry Lobanov, Head of E-Commerce

[email protected]

Year of foundation In Russia since 1996


100,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Internet Marketing.• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.• Web-site production and support.• FEA Services.• Thermo-regulated storage.

Delivery servicePickPoint, DPD, Maxipost, Boxberry,

Shop- Logistics, Russian Post

Warehouse size, m2

535,000 m2 (430,000 m2 — terminals in the Moscow area; 105,000 m2 —

in the regions of Russia)


Market players

KupiVip eCommerce Services

Parameter Value

Company name KupiVip eCommerce Services

Web-site b2b.kupivip.ru


Vladimir Holyazkinov, General Director of LLC «Privat Trade»;

Dmitry Kholomtsev, Managing Director, KupiVip

E-Commerce Services

+7 (495) 781-63-63

Year of foundation Order fulfillment direction since 2010


No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Returns processing.• Cross-docking.• Last mile courier and transport companies.• Provide tracking parcels. • Goods quality check.• Web-site production.• Communication with buyers (telephone, SMS, e-mail).• Services in the field of foreign trade.• Factoring.• Photoproduction.• Thermos-regulated storage (cooling zone).

Delivery service Own delivery service



Market players

Lamoda B2B

Parameter Value

Company name Lamoda B2B

Web-site b2b.lamoda.ru


Zhiltsova Alexandra, director

[email protected]

Year of foundation Order fulfillment since 2015


No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile via courier and transport companies.• Order tracking services.• Goods quality check.• Photoproduction.

Delivery serviceRussian Post, own delivery service,

private stores, third-party courier companies



Market players

Lenod

Parameter Value

Company name Lenod

Web-site lenod.ru


Phone in St. Petersburg: +7 (812) 748-29-18

InMoscow:+7 (495) 374-62-44

Year of foundation No data


No data

Services • IT-integration.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Order tracking services.• Goods quality check.

Delivery serviceOwn delivery service, Russian Post,

EMS, QiwiPOST



Market players

NextSolutions

Parameter Value

Company name NextSolutions

Web-site next-sol.ru


+7 (499) 685-19-91



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Communication with buyers (telephone, SMS, e-mail).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Provide tracking parcels. • Goods quality check.• Web-site production and support.• Photoproduction.

Delivery service No data



Market players

Prostore

Parameter Value

Company name Prostore

Web-site prostore.pro


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Order tracking services.

Delivery serviceOwn service, DPD, Ddelivery,

Boxberry, Axiomus, Maxima-Express, Russian Post, PickPoint



Market players

Reworker

Parameter Value

Company name Reworker

Web-site reworker.ru


Dmitry Novikov, CEO

[email protected]



20,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile via courier and transport companies.• Order tracking services.• Goods quality check.• Factoring.

Delivery serviceRussian Post, express delivery

and parcel shops in Russia



Market players

Ritm-Z

Parameter Value

Company name Ritm-Z

Web-site www.ritm-z.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Tab promotional materials.• Pick-up goods from suppliers.• Internet Marketing.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Provide tracking parcels. • Goods quality check.

Delivery serviceRussian Post, express delivery

and parcel shops in Russia



Market players

TRDE

Parameter Value

Company name TRDE

Web-site trde.ru


[email protected]

Year of foundationUnder the brand TRDE.

Current service since 2013


No data

Services • Call-center.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Order tracking services.• Goods quality check.

Delivery service Own courier service



Market players

Hello?Run

Parameter Value

Company name Hello?Run

Web-site allobegy.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Order tracking services.

Delivery service No data



Market players

IPS «M-City»

Parameter Value

Company name IPS «M-City»

Web-site m-city.ru/logist/ff.php


Michael Kapatsinskiy, CEO

+7 (495) 956 90 25

Year of foundationCompany was founded in 1996.

Order fulfillment started in 2008.


No data

Services • IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.

Delivery serviceRussian Post, EMS Russian Post,

MaxiPost



Market players

Courier Service Express

Parameter Value

Company name Courier Service Express

Web-site cse.ru


Sergei Sotnik, chief operating officer;

Vladislav Ivoylov, commercial director;

Sergei Volchkov, Director of Sales

[email protected]

Year of foundationCompany founded in 1997.

Order fulfillmentstarted in 2012


30,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Thermoregulated storage.

Delivery service Own delivery service



Market players

Logoskor

Parameter Value

Company name Logoskor

Web-site logoskor.ru


+7(495)544-16-75+7(495)544-16-78

Year of foundation In 1999. Order fulfillmentstarted later


No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Informing customers (phone or email). • Returns processing.• Order tracking services.• Goods quality check.

Delivery service Russian Post



Market players

Marshroute

Parameter Value

Company name Marshroute

Web-site marschroute.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Ordertrackingservices.• Goods quality check.• Communication with buyers (telephone, SMS, e-mail).• Factoring.• Photoproduction.

Delivery serviceRussian Post, DPD, CDEK,

IML, boxberry, Hermes



Market players

Molcom

Parameter Value

Company name Molcom

Web-site www.molcom.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Internet Marketing.• Informing customers (phone or email).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Order tracking services.• Goods quality check.• Web-site production and support.• Services in the field of foreign trade.• Factoring.


courier companies



Market players

Posylych

Parameter Value

Company name Posylych

Web-site posylych.ru


[email protected]



No data

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Informing customers (phone or email).• Returns processing.• Last mile via courier and transport companies.


courier companies



Market players

RusPost

Parameter Value

Company name RusPost

Web-site r-post.ru


[email protected]

Year of foundation Company was founded in 1998


No data

Services • Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Provide tracking parcels.

Delivery serviceRussian Post, transport and courier

companies, postamates



Market players

CDEK

Parameter Value

Company name CDEK

Web-site www.cdek.ru


Leonid Goldort, CEO,

Sergey Egorov, Commercial Director

[email protected].

Year of foundationCompany was founded in 2000. Order fulfillment started in 2014


8,000

Services • Call-center.• Promotional materials supplement.• IT-integration for online-shops.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Order tracking services.• Goods quality check.• Services in the field of foreign trade.• Factoring.

Delivery servicePrivate courier delivery service,

postamates, Russian Post

Warehouse size, m2 More than 10,000


Market players

SPSR-Express

Parameter Value

Company name SPSR-Express

Web-site www.spsr.ru


Maria Zaitseva, Head of development services

B2C in Russia, [email protected]

Year of foundation Order fulfillment is started in 2012


60,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Communication with buyers (telephone, SMS, e-mail).• Returns processing.• Last mile courier and transport companies.• Provide tracking parcels. • Goods quality check.• Web-site production and support.• Services in the field of foreign trade.

Delivery service Private courier service

Warehouse size, m2 More than 10,000


Market players

YamBox

Parameter Value

Company name YamBox

Web-site yambox.net


Muravyeva Maria, Sales Manager

[email protected]

Year of foundationStarted in 2003 under the INBS brand.

Rebranded in 2015 into YamBox


40,000

Services • Call-center.• IT-integration for online-shops.• Promotional materials supplement.• Pick-up goods from suppliers.• Informing customers (SMS).• Cross-docking.• Returns processing.• Last mile courier and transport companies.• Provide tracking parcels. • Goods quality check.• Services in the field of foreign trade.• Factoring.

Delivery service

Boxberry, DPD, Grastin, Delovielinii, ZhelDorEkspeditsiya, MaxiPost, Podorojnik, Russian Post CDEK,

SPSR Express, Strij



RESEARCH PARTNERS

eTraction (a member of the Otto Group) launched on the

ecommerce market in November 2012. eTraction offers a range

of services on creating, managing, and developing online-

shops for fashion, shoes, and accessories in Russia for owners

of trademarks, manufacturers, and distributors. Relying on the

immense experience and infrastructure of Otto Group Russia,

leader on the Russian market of electronic goods, eTraction

provides a peerless service on warehousing, processing, stor-

age and sorting goods, packaging and dispatching orders, full

cycle of returns processing, integrating supplier services (call

centres, payment systems, and delivery systems) as well as on-

line marketing for clients.

eTraction clients include famous Russian and international

brands, as well as young domestic designers.

The goods turnover of eTraction clients in 2015 reached

5 billion rubles. More than 1 million orders were dispatched.

Company CDEK founded in 2000 is one of the most

active and attractive express delivery participants on the

Russian market. It provides a full range of services corre-

sponding to modern international standards of logistics,

storage, packaging and delivery of documents and parcels in

Russia and worldwide. CDEK network covers more than 350

units and offices in Russia, China, Kazakhstan, Belarus, Kyr-

gyzstan and Armenia. In-house call-center, unique services,

such as interactive voice menu, non-voice call center, online

assistant, user-friendly and functional personal account of-

fice and others — all of this gives a possibility to control all

stages of mailings and cargo in real time. Unique scheme of

main routes helps to reduce costs and delivery time signif-

icantly and choose the most reliable and proven routes to

improve logistics solutions over long distances. Special terms

and proposals for distance selling companies, simple integra-

tion process that quickly and efficiently connects any online

retailer to monitor the system enable CDEK to occupy a lead-

ing position on the e-commerce market.


Data Insight Logistics Research

We started our series of the e-commerce logistics products

research in 2015.

The database of logistics companies

It is an information portal on the web-sitewhich contains the

list of logistics companies. Each company has a private card

with the key information about it: the type of a company;

specialization; types of goods, what it transports; territory

coverage; types of transport used; the list of services, contact

information, customer reviews. There is a possibility to

search upon a concrete criteria. This makes the database not

only an information resource, but also a handy tool for an

online-shop, useful for searching for a most suitable logistics

company, based on the shop-specific characteristics.

Logistics companies that were included into the database,

will get a new potential customersrequests flow. The base

will be constantly updated and supplemented.

Publication: April 2016, since then — continuous update.

Format: web-site, with public access.

The format of participation: logistics companies advertising

banners on the pages devoted to the registry.


88


Online-shops opinion and expectationstowards logistics companies

This research is based on a series of interviews. We inter-

viewed online retailers about their expectations of logistics

companies and whether they plan to outsource logistic pro-

cessesor not. Another series of interviews were held with

logistics companies to understand their opinion on the on-

line-shops expectations. On the one hand, The result of this

research will allow logistics companies to review products

and services that could interest their customers. On the other,

this will allow online-shops to get familiar with the existing

logistics services offers on the market, on the advantages

and disadvantages of outsourcing.

Publication: April-May.

Format: pdf + print version.

Free of charge.

The format of participation: partnership (logistics companies

only).

First published in April 2015.



Market Size

This research summarizes the results of the logistics market

during the previous year. It includes main trends and figures

on the market: volume, share of the distribution of key in-

dustry players and other figures. We collected the necessary

data from the market players and online-shops. This gives

us a possibility to check the validity of the data provided

and evaluate the volume of the market. For those players

who could not provide us data, we used our internal calcu-

lations to find out their input in the market. The second year

research will include analysis of market dynamics, and com-

pany’s comparison.

Publication: June-July.


Paid survey.


only).

Logistics services for online-shopping.Main report

A key survey on the logistics market for online-shopping:

main market trends, key players, market ecosystem and

analysis of this ecosystem. The survey includes all components

of the logistic services for online stores from last mile

operators to order fulfillment. We implemented this survey

by market analysis, expert interviews, and analysis of the

trends that determine today market development. Thus, the

«main report» — is a «weathercock» for the logistics market.

The short format of this survey gives complete information

that defines the strategy for all market players.



Publication: September.


Free of charge.


only).

Order fulfillment for e-commerce

The research devoted to order fulfillment services on the

market for e-commerce in Russia.Its main purpose is to

acquaint potential customers of these services (online-shops,

regular stores, suppliers of goods that do not have their retail)

with the possibilities available on the Russian market. The

survey contains a list of possible services, market players, case

studies, key trends and features of order fulfillment services

on the Russian market, the expectations of customers, barriers

and risks to potential customers. Starting from the second

year of the study, the survey will be complemented with the

Russian order fulfillment market assessment, comparison of

market players and so on.

Publication: December-January.


Free of charge.


and companies providing order fulfillment services only).

OUR SERVICES:Key areas of our research and consultancy activity – what we study:

PayPal

PayU / Naspers

Svyaznoy

Banki.ru

Fastlane Ventures

Prostor Capital

IAB Russia

SoftKey

Media3

Dentsu Aegis

CityAds

Ad-hoc researches

Standard reports

Consultancy for online projects

News monitoring

We conduct deep researches on individual requests from online companies and investors. Ask us for examples or come to us with the specific task – we will think about specific solution

The list of available reports on e-commerce and other segments on online industry can be obtained via website or by phone

We provide consulting services on all stages – including strategy, marketing and technology

We create research reports and white papers as infosupport of businesses and new B2B products and services

We track news on e-commerce and interactive advertisement

Public researches

Ecosystem of b2b services for e-commerce: logistics, payments, marketing solutions

Ecosystem of digital advertisement: services, technologies, measurements

E-commerce, including online retail of material goods, e-travel, online services, m-commerce, consumer behavior

Ecosystem of startups and investments

AMONG OUR CLIENTS:

Услуги, которые мы оказываем:Ключевые направления исследований:

PayPal

PayU

TIU

Связной

Банки.ру

Адмедиа

Prostor Capital IAB Russia

SoftKey

Media3

Adventum

Dentsu

CIAN

CityAds

Fastlane Ventures

Исследование для интернет-компаний, инвестиционных компаний, сервисов и пр. по запросу

Предоставление готовых отчетов по различнымсегментам интернета

Консультации интернет-проектов

Мониторинг новостей

Примеры исследований уточните у нас напрямую или приходите с задачей, а мы подумаем, как ее решить.

Список существующихотчетов Вы можете уточнить у нас на сайте или по телефону

Консультируем на разных стадиях по вопросам стратегии развития, маркетинга, технологиям

Исследования/контент-продукты для информационной поддержки компании и запускановых продуктов

Следим за новостями электронной коммерции, интернет-рекламы, технологических стартапов

Презентационныеисследования

Сервисы и услуги для электронной коммерции, инфраструктура и экосистема интернет-торговли.

Интернет-реклама, сервисы для интернет-рекламы, технологии интерактивнойрекламы, поведение аудитории интернета.

Электронная коммерция, включая мате-риальные товары, туристические и образо-вательные услуги, поведение потребителей в интернете и в мобильном интернете.

Стартапы и инвестиции в интернет-стартапы, инвестиционные фонды.

НАШИ КЛИЕНТЫ:Data Insight. Research & consultancy agency

+7 (495) 540-59-06

[email protected]

www.datainsight.ru

Established in 2010. Focused on Internet & e-commerce re-

searches.

Our core competence: analysis of non-complete and heteroge-

neous information, search for non-standard data sources, data

comparison and data combination. Any estimates and results

we publish are cross-checked by multiple methods to get con-

sistent outcomes.

OUR SERVICES:Key areas of our research and consultancy activity – what we study:

PayPal

PayU / Naspers

Svyaznoy

Banki.ru

Fastlane Ventures

Prostor Capital

IAB Russia

SoftKey

Media3

Dentsu Aegis

CityAds

Ad-hoc researches

Standard reports

Consultancy for online projects

News monitoring

We conduct deep researches on individual requests from online companies and investors. Ask us for examples or come to us with the specific task – we will think about specific solution

The list of available reports on e-commerce and other segments on online industry can be obtained via website or by phone

We provide consulting services on all stages – including strategy, marketing and technology

We create research reports and white papers as infosupport of businesses and new B2B products and services

We track news on e-commerce and interactive advertisement

Public researches

Ecosystem of b2b services for e-commerce: logistics, payments, marketing solutions

Ecosystem of digital advertisement: services, technologies, measurements

E-commerce, including online retail of material goods, e-travel, online services, m-commerce, consumer behavior

Ecosystem of startups and investments

AMONG OUR CLIENTS:

Internet researches in Russia and CIS